A recent speech by Federal Insurance Office Director Michael McRaith has drawn criticism from PIA National. Best’s News Service reported on remarks McRaith made to the Networks Financial Institute’s Insurance Public Policy Summit on March 12th. In that speech he said, "We need to get past the notion that the insurance sector in the United States should be treated separately than any other sector because of this historic debate going back to 1904."

PIA Senior Vice President Patrica Borowski took exception to McRaith’s claim. "When Mr. McRaith says the insurance sector should be treated the same as the banking and securities sectors, he is dead wrong, and in conflict with current federal laws, among them the McCarran-Ferguson Act and the Gramm-Leach-Bliley Act (GLBA). The fact that insurance is regulated by our state-based regulatory system is why our sector — and the policyholders it serves — emerged almost completely unscathed from the financial crisis of 2007-2009, in marked contrast to the federally-regulated sectors."

The National Association of Professional Insurance Agents (PIA) takes issue with an assertion made by Michael McRaith, the director of the Federal Insurance Office (FIO), in a recent speech. In remarks to the Networks Financial Institute’s Insurance Public Policy Summit on March 12, as reported by Best’s News Service, McRaith said this: "We need to get past the notion that the insurance sector in the United States should be treated separately than any other sector because of this historic debate going back to 1904."

"When Mr. McRaith says the insurance sector should be treated the same as the banking and securities sectors, he is dead wrong, and in conflict with current federal laws, among them the McCarran-Ferguson Act and the Gramm-Leach-Bliley Act (GLBA)," said PIA Senior Vice President Patricia A. Borowski. "The fact that insurance is regulated by our state-based regulatory system is why our sector – and the policyholders it serves – emerged almost completely unscathed from the financial crisis of 2007-2009, in marked contrast to the federally-regulated sectors."

Faegre Baker Daniels and FaegreBD Consulting were pleased to partner again with Networks Financial Institute (NFI) and the Scott College of Business at Indiana State University in presenting the 10th Annual Insurance Public Policy Summit in Washington, D.C., on March 12, 2014. This year's Summit focused on U.S. and international insurance regulation.

Clarification of Collins Amendment is Credit Positive for Systemically Important Insurers

March 17, 2014

Fixed Income Analysts Society: Credit Outlook

At a public policy forum last week, the National Association of Insurance Commissioners (NAIC) President-elect and Montana Insurance Commissioner, Monica Lindeen, said that the organization aims to limit or wind down the risky activities of firms that are systemically important, which would also benefit their risk profiles.

Designation as a non-bank SIFI will place insurers under the jurisdiction of the Federal Reserve System, which will provide regulatory oversight beyond the current state insurance regulatory framework for insurers. Non-bank SIFIs will be subject to additional scrutiny and requirements related to solvency, capital adequacy and liquidity. They will need to pass rigorous stress-testing, which would likely require that they maintain more conservative financial management, thereby limiting their ability to assume outsize risks. Additionally, if being a non-bank SIFI provides access to the Fed window for liquidity, these issuers could benefit from funds for unanticipated needs in a severe stress scenario

Allowing the program to expire on Dec. 31,
Extending the current program;
Phasing out the program by providing insurers time to establish business models to handle terrorism risks;
Creating a bifurcation of terrorism coverage by placing traditional terrorism with private insurers, while maintaining the federal backstop for significant nuclear, chemical, biological, or radioactive terrorist attacks.

Neugebauer made his remarks at the Indiana State University’s 10th annual Network Financial Institute insurance public policy summit in Washington. American Bankers Association.

While Treasury’s Federal Insurance Office is promoting a hybrid landscape of state and federal insurance regulation, discussion in insurance regulatory circles still centers on preemption of state regulation—the need, fear or avoidance of it.

FIO Director Michael McRaith, in one of his first public appearances since FIO released the modernization report in December, said that no one debates that the absence of uniformity in the states creates inefficiencies and burdens for stakeholders like consumers and insurance companies. He said that he envisions building upon the hybrid model and calibrating the state and federal roles.

The states are the primary regulators of insurance, but the federal government is equipped to play a part as well—and will, according to McRaith’s remarks at the Networks Financial Institute’s (NFI) 10th anniversary Insurance Public Policy Summit at Indiana State University in Washington on Mar.12.

Insurance company activities representing a true systemic economic risk should be wound down, NAIC President-elect and Montana State Auditor Monica Lindeen said at a public policy forum in Washington, D.C., on March 12.

The bar to designating an insurance company as a nonbank systemically important financial institution should be high, with evaluations based on highly leveraged, thinly capitalized or unregulated activities, Monica Lindeen said at the 10th Annual Networks Financial Institute Insurance Public Policy Summit. NAIC members are uneasy at the prospect of national and international systemic risk designations creating two tiers of companies: those labeled as SIFIs and those not, she said. "Our goal is to wind down the activities of firms that are indeed systemic," Lindeen said.

There are three options to deal with the federal government's terrorism insurance backstop program, a key member of Congress said Wednesday. The program could be allowed to expire on Dec. 31, as it is slated to do, said U.S. Rep. Randy Neugebauer, R-Texas and chairman of the House Financial Services Committee's subcommittee on housing and insurance.

The program also could be extended, Rep. Neugebauer told attendees Wednesday at Indiana State University's 10th annual Network Financial Institute insurance public policy summit in Washington. The third option is if there is support to continue the backstop, "how can we move the ball forward to phasing out" the program while giving the insurance industry time to prepare business models to deal with the terrorism risk, he said.

The Federal Insurance Office's report on insurance regulatory modernization is meant to address "the world as it is," FIO Director Michael McRaith said Wednesday. Mr. McRaith said in preparing the report, which was issued in December, the drafters determined that the United States should build on the current hybrid system of state and federal insurance regulation.

Speaking Wednesday at Indiana State University's 10th annual Network Financial Institute insurance public policy summit, Mr. McRaith said even backers of state insurance regulation support the idea of some federal role in the issue.

When Federal Insurance Office (FIO) Director Michael McRaith delivers the keynote at the Insurance Public Policy Summit in Washington this week, the report the Office issued this past December, How to Modernize and Improve the System of Insurance Regulation in the United States, will take center stage.

The long awaited … and delayed … report has been the subject of quite a bit of controversy in the weeks since its arrival, not surprising given the longstanding concerns on both sides over the role of the federal government in regulation of an industry that has traditionally been left almost entirely to the states. Perhaps too, the entry into the health insurance arena of various federal entities involved with health care reform has exacerbated tensions over the prospect of federal intervention in other major lines of business, i.e., property, casualty, life and annuities, reinsurance.

"The NFI summit has earned a reputation as one of the most engaging and provocative annual events for the financial services industry and this year's program may produce the most vigorous discussion yet," said Brien Smith, dean of Indiana State University's Scott College of Business and interim director of NFI.

For more than a decade, NFI - an outreach of Indiana State's Scott College of Business - has been working to answer challenges surrounding the financial services industry. A 2011 NFI policy brief provided detailed recommendations for the insurance office's congressionally-mandated report on how to respond to questions posed by the Dodd-Frank Wall Street Reform and Consumer Protection Act.